QLD economy to grow despite global headwinds

Queensland’s economy will defy the national trend and keep growing faster, according to the state’s budget. But it’s all banking on two things.

Queensland Treasurer Cameron Dick and Premier Annastacia Palaszczuk. Picture: Dan Peled / NCA NewsWire

Queensland’s economy will defy the national trend and keep growing faster, despite the global headwinds, according to the state’s budget.

But it is banking on inflation cooling rapidly over the next 12 months, as well as interest rate rises peaking mid-year before starting to fall in 2024.

Meanwhile, the state’s coffers have received a massive top up due to a $15 billion coal royalty take – $10 billion more than predicted last year when the state announced its tax hike on the resource.

Budget documents forecast the state’s level of inflation will fall from 7.25 per cent to 3.75 per cent by the end of 2023-24.

It is largely in line with the national inflation forecast from the Reserve Bank of Australia, which is predicting it to fall from 6.25 per cent to 3.5 per cent over that time.

But the RBA has warned inflation could remain higher for longer if productivity growth remains weak, or if rents increase by more than expected.

But, while growth in the national economy is expected to slow over the coming year, from 1.75 per cent to 1.5 per cent, Queensland is forecast to grow faster, from 2 per cent growth this financial year to 3 per cent in the next.

This is partially driven by exports bouncing back post-Covid, particularly with the rebound in tourism and education services exports, as well as a strong jobs market.

The budget’s economic forecast is predicated on the RBA’s interest rate hikes peaking mid this year and easing over 2024.

After the June interest rate rise, Commonwealth Bank’s head of economics Gareth Aird forecast up to another two increases this year – in July and August – but that there will be decreases next year.

When Treasurer Cameron Dick handed down last year’s budget, he predicted the increased royalty regime would raise an additional $1.2 billion over four years.

It has raised $10 million more than expected this year alone, taking the total coal royalty take to $15.29 billion.

Treasurer Cameron Dick. Picture: Dan Peled / NCA NewsWire

Net debt, excluding the debt shifted into the books of government-owned corporations, will drop from $19 million this financial to just $5 million in 2023-24 before soaring back up to $46 million by 2026-27.

Queensland was once the low-tax state, and while it is no longer there, it is still lower than most.

Taxation per capita is about $3757 in Queensland, beaten by South Australia, Tasmania and the Northern Territory, based on 2021-22 data.

The national average was $4478 with residents in NSW, Victoria, WA and the ACT all forking out more for the taxman.

Originally published as QLD economy to grow despite global headwinds